AfCFTA and Trade UN Services Tops the Agenda of the Sro-SA Ad-Hoc Expert Group Meeting

20 October 2020

Lusaka Zambia — The United Nations Economic Commission for Africa (ECA) Sub-Regional Office for Southern Africa (SRO-SA) convened an Ad-hoc Expert Group Meeting on the theme: "The African Continental Free Trade Area (AfCFTA) and Trade in Services: Opportunities and Strategies for Southern Africa." This Ad-hoc Expert Group Meeting (AEGM) was held as a prelude to the 26th Session of the Inter-Governmental Committee of Senior Officials and Experts (ICSOE) of Southern Africa.

The AEGM brought together senior government officials and experts in regional integration and trade in services from the SADC member States, representatives of the SADC and COMESA Secretariats, representatives from the African Union Commission, academic and research institutions, civil society, professional organisations, the UN family and other ECA Divisions and Sub-Regional Offices.

The 26th ICSOE of Southern Africa to be hosted by the Government of Lesotho under the theme: "Policies and Strategies towards effective Private Sector-led growth and Job Creation in Southern Africa" will be organized virtually on 28-29th October 2020. This AEGM generated key messages and policy recommendations that will be presented to member States for endorsement at the 26th ICSOE and will be taken into account in the future work programme of SRO-SA. In light of ongoing negotiations on the AfCFTA including under the Protocol on Trade in Services, the AEGM presented an opportunity for informing member States on the current status of trade in services negotiations under the AfCFTA and provided a platform for dialogue and deliberations as to how the Southern African region can better position itself to take advantage of the potential benefits of the AfCFTA in trade in services.

In his welcoming remarks, Mr. Sizo Mhlanga, ECA SRO-SA Director, who advised that the main objective of the AEGM was to discuss how Southern Africa could leverage the opportunities of the AfCFTA to develop a competitive, efficient, high value-added tradable services sector that can promote private sector growth and create decent jobs in the region. "The AEGM deliberations will be critical in shaping policy recommendations on how Southern Africa can harness opportunities from the AfCFTA and its Protocol on Trade in services to accelerate its structural transformation and sustainable developmen,t" he noted.

He called on participants to take this opportunity to apprise member States on the status of negotiations on trade in services under the AfCFTA and most importantly, to reflect on the type of institutional, regulatory and governance reforms that should be put in place to promote intra-regional trade and intra-regional investment and cooperation in the services sector in the sub region.

The meeting was officially opened and chaired by, Mr. Mluleki S. Dlamini, Director, Eswatini Ministry of Commerce, Trade and Industry, Chair of 25th ICSOE Bureau, who commended UNECA for adopting this theme and providing a platform for addressing the important topic of trade in services under the AfCFTA. He called on governments, policymakers and development practitioners to recognise that a deeply integrated Africa would unleash the region's enormous untapped economic potential and could significantly contribute to the structural transformation of its economies and sustainable development outcomes. He noted that the adoption and entry in force of the AfCFTA was a key achievement and an important milestone in the continental integration agenda. "It is satisfying to observe that we are slowly but surely moving forward with the agreement, with several member States preparing strategies for its implementation. The AfCFTA is a lot more than just a market access initiative for goods and services. It is a lever for driving Africa's industrialization, economic diversification and sustainable development. This agreement is expected to provide immense opportunities for Africa's businesses. It will help consolidate the continental market, making it easier for the private sector to take full advantage of value chains across the continent and exploit significant economies of scale. The AfCFTA is indeed expected to contribute towards the development of regional value-chains on the continent and unleash opportunities for MSMEs," he concluded.

The official opening was followed by a presentation on, "the African Continental Free Trade Area (AfCFTA) and Trade in Services: Opportunities and Strategies for Southern Africa," by ECA Consultant, Mr. Paul Baker. The report alluded to the services sector being the most dynamic and promising sector in Southern Africa. "Services is constantly gaining further weight as the key engine of any economy. While agriculture's contribution to GDP has decreased from 17.5 percent in 2000 to 15.3 percent in 2019, the importance of the services sector is expected to continue increasing, leading both to enhanced service sector exports and increasing wealth," he advised.

According to his presentation, the AfCFTA can represent a game-changer for the African region. With 54 Contracting Parties and set to become operational on 1 January 2021, the AfCFTA will create a consolidated market of 1.2 billion people and a USD 2.5 trillion economy for goods and services, with the removal of tariff and non-tariff barriers. He recommended that for Southern Africa to benefit from tradable service sectors, supply and policy constraints had to be tackled such as, limited access to financing, limited prospects to serving foreign markets without an established presence, weak infrastructure and limited access to networks and institutional facilities necessary for implementing the provisions of the Protocol on Trade in Services.

In the second session, participating regional experts provided an overview of the services and tradable services sectors in Southern Africa. Mr. Malcom McKinnon, Senior trade policy advisor, SADC Secretariat, highlighted the role of services in manufacturing and noted the high price of services in the SADC. Mr. Andrew Mold, Chief of the AfCFTA and Regional Integration cluster, ECA Sub-Regional Office for East Africa (SRO-EA) emphasised the importance of developing a competitive regional service market to ensure that the benefits were passed to consumers. He cited the ECA SRO-EA econometric study that showed that, "measures taken in East Africa have led to a 65 percent increase in bilateral services in trade and East Africa has revealed strongest comparative advantage."

On the state of play of trade in services negotiations under the AfCFTA in Southern Africa, Ms. Beatrice Chaytor, Senior expert on trade in services, at the Department of Trade and Industry of the African Union Commission presented the status of trade in services negotiations under the AfCFTA. She informed the meeting that all countries in Africa had signed the Agreement Establishing the AfCFTA (except Eritrea) and the AUC was supporting them in negotiating measures affecting trade in services. The support included training in negotiating techniques and on offers and requests, studies on trade in services and conduct of regulatory audits. Dr. Christopher Onyango, Director, Trade policy, COMESA Secretariat presented a comparison of the state of play of negotiations on trade in services under the various Regional Economic Communities (RECs). The Chief AfCFTA negotiators of Mauritius, Lesotho and Zambia reported on the state of trade in services negotiations in their respective countries. Mauritius market access offers exceeded the General Agreement on Trade in Services (GATS) commitments; Lesotho had scheduled sector specific commitments in almost all service sectors while Zambia intended to make offers on all five priority service sectors of the AfCFTA, namely business services, tourism and travel related services, transport, communication and financial services.

On opportunities and strategies for Southern Africa to benefit from trade in services under the AfCFTA, the e representative from UNCTAD, among others, highlighted the technical support that UNECA and UNCTAD were providing to member States in developing regional value chains in services, within a joint UN Development Account project. Ms. Trudi Hartzenberg, Executive Director of Trade Law Center (TRALAC), South Africa, emphasised on the need to create an internally consistent regulatory ecosystem in services trade across the RECs and the AfCFTA .

Mr. Jason Theede, Senior Labour Mobility and Human Development specialist, International Organization for Migration (IOM) explored the nexus between trade in services and labour mobility and noted the criticality of intra-regional labour mobility in delivering on the benefits of the AfCFTA. He also called on all actors to recognise labour as a regular service which could provide a basis for future bilateral agreements. Mr. Quan Zhao, Trade policy advisor, Division for market development, International Trade Center (ITC) emphasise on the importance and the potential role of digitalization in stimulating trade in services in Southern Africa. He advised of the challenges that needed to be addressed in order for the region to effectively leverage on digitalization to enhance services trade, for example, the need to improve on digital infrastructure and enhancing digital skills development. .

In his closing remarks, the chair, Mr. Mluleki S. Dlamini, applauded participants of the AEGM for, "providing member States with an update of the status of trade in services negotiations as well as stimulating discussions on contentious issues that may impede a swift finalization of such negotiations and on the type of institutional, regulatory and governance structures that should be put in place to promote intra-regional trade, investment and cooperation in the services sectors."

The recommentations from the AEGM will enhance understanding of the challenges and opportunities faced by SRO-SA member States in developing competitive, efficient and high value-added tradable services sectors that can allow them to benefit from the AfCFTA. The meeting also contributed to strengthened debate and dialogue on regional integration and steer reflections on the actions needed to accelerate the pace of regional integration in Southern Africa such that member States can better take advantage of the AfCFTA to achieve their national development objectives, the SDGs and Agenda 2063.

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